BRIEF: Many Idea Cloud launches 1-for-6 rights issue at 22% discount

Marketing solutions provider Many Idea Cloud Holdings Ltd. (6696.HK) announced on Thursday that it plans to raise up to HK$274 million ($35 million) through a 1-for-6 rights issue. It set the subscription price at HK$0.4753 per share, representing a discount of about 22% to its last closing price.

The company will issue up to 576 million new shares, equivalent to approximately 85.7% of its enlarged share capital, or 600% of its currently issued shares. The rights issue will only be available to eligible shareholders. Controlling shareholders, who collectively hold about 16.9% of the company, have irrevocably committed to fully subscribing to their allocation of about 97.5 million rights shares.

Many Idea Cloud said around 92.3% of the proceeds will be used to develop an in-house AI model, including investments in AI-specific computing hardware to build an efficient and scalable internal computing platform. About 7.7% will go toward purchasing media resources, particularly online traffic from platforms such as Kuaishou, WeChat Channels, and RedNote, to help clients advertise across these networks.

The company noted it has recently secured first-tier agency partnerships with Douyin and Kuaishou, requiring significant prepayments that have increased its cash needs. The board said the proceeds from the rights issue will help ease the heavy cash flow requirements of such partnerships while also supplementing its working capital.

The company’s stock initially surged on Friday after the announcement, but later gave back some of the gains to close up 4.92% at HK$0.64 by the midday break.

By Lee Shih Ta

To subscribe to Bamboo Works weekly free newsletter, click here